Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.864 | EURUSD 1.13611 | EURJPY 135.036 | AUDUSD 0.78859 | NZDUSD 0.75413 | USDCAD 1.24386 | EURCHF 1.07754 | USDCHF 0.94849 | GBPUSD 1.55282 | EURGBP 0.73159 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.425 | 119.11

EUR/USD             1.1215 | 1.1193

EUR/JPY               133.78 | 133.52

AUD/USD            0.7816 | 0.7778

NZD/USD             0.7551 | 0.7514

USD/CAD             1.2524 | 1.2487

EUR/CHF              1.06905 | 1.06465

USD/CHF             0.9538 | 0.9493

GBP/USD             1.5446 | 1.5405

EUR/GBP             0.7270 | 0.72605
For today

·         EUR: Euro’s has traded quietly through the session moving from the opening 1.1200 areas to push the mid-teens before running out of steam and holding in the areas as we head towards the grey hours, Downside bids to the 1.1180 levels before giving way to likely weak stops and the market opening to the 1.1120 areas where there is likely to be bids in front of the years lows, through the 1.1090 the market could possibly open up for a larger decline. Topside is a little weak into the 1.1300 areas however a move through the 1.1320 will see stops triggered and a move back to yesterday’s ranges if the market can gain traction. Concerns are beginning to appear with Greece set to pay the IMF €1.6B in March, with a total of €7.24Bof obligations for the month €4.6B in Tbills  and little time left to raise the remainder and the EU unwilling to allow an increase on Tbill issues.

• GBP: Cable has seen a steady rise from the opening 1.5410 levels and pushing quietly to above the 1.5440 areas over the course of the session, there has been little influence generally over the course of the day, with a generally weaker USD in the session as Asia moves towards the weekend. Topside offers into the 1.5500 levels are likely to be weak this time around and the market is likely to be a mixture of light offers and stops through to the 1.5540 where the market starts to be dominated by better offers, a move through the 1.5560 level will likely see weak stops and the 1.5600 will likely be just as strong this time around. Downside bids around the 1.5400 areas seem to be fairly strong and only a push through the 1.5390 level will open up the downside, weak stops through the level will see only light bids until the 1.5350 areas and better support.
• JPY: USDJPY having opened just short of yesterday’s highs saw the market hold the levels into the Tokyo session before a quick dip to the 119.20 areas as early sellers took profit and cut positions for the move into the weekend, the market recovered slightly from fixing demand before USD’s came under a little pressure across the board and USDJPY traded down into the 119.12-13 areas before finding light support. Topside offers from the 119.50 area are likely to start off reasonably strong before weakening towards the 119.75 levels before again showing an increase in size from 119.80 onwards with possible option structures coming into play in front and behind the 120.00 areas, through 120.30 the market is likely to see further offers in the pair and the move to 121 a struggle to push too. Downside bids light into the 118.80 levels and a strong push through the 118.70 areas will likely see weak stops however, they are likely to be very light and the market has a possibility of holding in the area and opening a short squeeze.
• AUD: Early trading saw the Sydney session buying light but steadily off the 78 cent level and pushing through the 0.7810 areas and into the TKY session, some reasonable AUDJPY selling appeared in the market as retail market closed down positions going into the weekend, and this dropped the market back below the 78 cent level with the market eventually trading down to the 0.7780 levels before beginning to recover once the market had finished adjusting. Topside offers again start to appear through the 0.7880 levels and the previous 0.7840 areas for me is well a truly put to one side. A strong push through the 79 cent levels will need to push the 0.7920 area before any likelihood of stops appear and opening of the route to the 80 cent level, Downside bids for the moment around the 0.7780 level and while talk in the market is again shifting to take into account a possible cash rate cut next week the downside still looks to be strong on any attempt through 77 cents.

Overnight News

JPY:

Kuroda: Watching to See If Shift in Deflationary Mind Continues

Japan’s Inflation Rate Slows More Than Forecast in January

Japan Household Spending Has Biggest Negative Surprise in 4 Mos.

Japan Jan. Unemployment Rate at 3.6%; Est. 3.4%

Japan Jan. Industrial Production Rises 4% M/m; Est. +2.7%

Japan Jan. Retail Sales Fall 1.3% M/m; Est. -0.4%

CNY:

Yuan Drops to Two-Year Low as PBOC Weakens Fixing Amid Slowdown

China Says Single-Digit Export Growth May Persist This Year

China Should Loosen Monetary Policy: Sec. Journal Commentary

China Faces Relatively Large Downward Pressure: NDRC Chairman

AUD:

Australia Annual Lending to Business Climbs to 6-Year High

NZD:

N.Z. Consents Excluding Apartments Fall to 19-Month Low

N.Z. Business Confidence Gains, Adding to Signs of Growth: ANZ

KRW/CNY:

S.Korea Outlines Incentives for Market Makers in Won-Yuan Trades

GBP:

U.K. Feb. GfK Consumer Confidence +1 vs Est. +2

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Building Permits M/M Jan A -3.80% | P -2.10% | R -2.30%

JPY         Unemployment Rate Jan A 3.60% | C 3.40% | P 3.40%

JPY         Household Spending Y/Y Jan A -5.10% | C -4.20% | P -3.40%

JPY         National CPI Core Y/Y Jan A 2.20% | C 2.30% | P 2.50%

JPY         Tokyo CPI Core Y/Y Feb A 2.20% | C 2.20% | P 2.20%

JPY         Industrial Production M/M Jan (P) A 4.00% | C 2.70% | P 0.80%

JPY         Retail Trade Y/Y Jan A -2.00% | C -1.10% | P 0.20% | R 0.10%

NZD       NBNZ Business Confidence Feb A 34.4 | P 30.4

GBP       GfK Consumer Sentiment Feb A 1 | C 3 | P 1

JPY         Housing Starts Y/Y Jan A -13.00% | -11.30% | P -14.70%

8:00        CHF        KOF Leading Indicator Feb C 87 | P 97

13:00     EUR        German CPI M/M Feb (P) C 0.70% | P -1.10%

13:00     EUR        German CPI Y/Y Feb (P) C-0.20% | P -0.40%

13:30     USD       GDP (Annualized) Q4 (S) C 2.10% | P 2.60%

13:30     USD       GDP Price Index Q4 (S) C 0.00% | P 0.00%

14:45     USD       Chicago PMI Feb C 58.3 | P 59.4

15:00     USD       Pending Home Sales M/M Jan C 2.30% | P -3.70%

15:00    USD       U. of Michigan Confidence Feb (F) C 94 | P 98.1

Harry Hindsight              

• EUR: The Asian market was very quiet range wise however, the volumes told a different story as the market pushed gradually from the opening 1.1365 areas to push through 1.1370’s and into light resistance. The move into London saw the market dip to the 1.1350 levels moving lightly on the various early numbers mixed confidence numbers saw the market head to the 1.1380 levels and the market quickly rejected the level and started a long drawn out fall back and the market started to talk about accounts that had flattened positions over the past couple of weeks because of the Greek story now re-entered the market from the short side and the fall to the 1.1320 was a gentle affair, support in the area lasted briefly and the Euro quickly broke lower through the 1.1300 levels dropping initially to the 1.1260’s and then following through as the US numbers particularly the Durable good number coming in better than expected and the Euro moved to the 1.1200 level before holding around the area into the close slipping into the 1.1180’s before trading the 1.1200 for several hours.
• GBP: Cable made early gains as GBP buying moved the market from the opening 1.5530 and pushing briefly through the 1.5550 level and into some light offering, the market continued to press the level for several hours before drifting off into the grey hours and continuing into the London session, the general strength of the USD over the course of the session saw the GBP dragged lower as interest in selling Euro’s picked up, GBP tipped through the 1.5500 level with numbers released in line with expectations and so too indifferent to halt the slide, the move through the 1.5490 triggered weak stops and the drag of the Euro took Cable down to the 1.5400 in a tight and steady decline over a 3hr period. Although the market penetrated the figure area it was always by a couple of pips only and the market moved to the close generally holding above the level.
• JPY: USDJPY started the day slowly before moving higher on fixing demand into Tokyo and a push to above the 119.00 levels before giving up and holding in the 118.90’s for the session, the move into London saw the market drop quickly lower as selling in cross Yen pairs sent USDJPY to the 118.70’s and then holding around the levels into the NYK opening. The move into NYK saw the market in USD’s bid and initial buying moved the market back to above the opening 118.85 levels and the early numbers in the US sent the market quickly to above the original highs, weak stops through the levels took the market steadily higher over the course of the session topping around the 119.50 levels into late NYK and steady trading from then to the close.
• AUD: Having opened around the 0.7880 levels the market dropped on the move into the Tokyo session back to the 0.7840 levels that had caused so much trouble on the move up, It held the levels into the London session and London were strong buyers again and the push to the 0.7890 levels saw the market holding for a couple of hours, mixed European confidence numbers triggered some EURAUD selling and the market this time pushed through the 79 cent level topping just above the 0.7910 and then the move into the NYK session and USD strength kicked in, and the Oz was on the back foot from that point on. The move from 0.7880 to the 0.7850 levels was sharp but the rest of the move back through the 78 cent level was steady and the market having touched the 0.7790 before finishing the day just above the level.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Trade Balance (NZD) Jan A 56M | C -183M | P -159M | R -195M

EUR        German GfK Consumer Sentiment Mar A 9.7 | C 9.6 | P 9.3

EUR        Eurozone M3 s.a. Y/Y Jan A 4.10% | C 3.80% | P 3.60%

GBP       GDP Q/Q Q4 (P) A 0.50% | C 0.50% | P 0.50%

GBP       Index of Services 3M/3M Dec A 0.80% | C 0.70% | P 0.80%

EUR        Eurozone Business Climate Indicator Feb A 0.07 | C 0.22 | P 0.16 | R 0.12

EUR        Eurozone Industrial Confidence Feb A -4.7 | C -4.6 | P -5 | R -4.8

EUR        Eurozone Consumer Confidence Feb (F) A -6.7 | C -6.7 | P -8.5

EUR        Eurozone Economic Confidence Feb A 102.1 | 101.7 | P 101.2 | R 101.4

EUR        Eurozone Services Confidence Feb A 4.5 | C 5.3 | P 4.8

USD       CPI M/M Jan A -0.70% | C -0.60% | P -0.40%

USD       CPI Y/Y Jan A -0.10% | C -0.10% | P 0.80%

USD       CPI Core M/M Jan A 0.20% | C 0.10% | P 0.00%

USD       CPI Core Y/Y Jan A 1.60% | C 1.60% | P 1.60%

CAD       CPI M/M Jan A -0.20% | C -0.40% | P -0.70%

CAD       CPI Y/Y Jan A 1.00% | C 0.70% | P 1.50%

CAD       BoC CPI Core M/M Jan A 0.20% | C 0.10% | P -0.30%

CAD       BoC CPI Core Y/Y Jan A 2.20% | C 2.10% | P 2.20%

USD       Durable Goods Orders Jan A 2.80% | C 1.80% | P -3.40% | R -3.30%

USD       Durables Ex Transportation Jan A 0.30% | C 0.50% | P -0.80% | R -0.90%

USD       Initial Jobless Claims (FEB 21) A 313K | C 285K | P 283K | R 282K

USD       House Price Index M/M Dec A 0.80% | C 0.40% | P 0.80%

Good Luck,

Andy

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